In a consultation paper published on 14 April 2023, HKEX proposed to mandate climate-related disclosures in their ESG reports for all issuers, thus updating from the previous \u201ccomply or explain\u201d approach.<\/p>\n
The new Appendix 27 Part D will be based on the ISSB Climate Standard, and will come into effect on 1 January 2024 after considering the public\u2019s response throughout the consultation period, which is scheduled to end on July 14, 2023.<\/p>\n
The proposed climate-related disclosures has been structured similarly to the TCFD framework, which consists of 4 core pillars: Governance, Strategy, Risk Management, and Metrics and Targets. Additional proposed disclosures are explained below.<\/p>\n
Quantitative Financial Impact <\/strong><\/p>\n The consultation paper proposes the disclosures of current and anticipated financial impacts of climate-related risks and opportunities over a short-, medium- and long-term. During the interim period, qualitative disclosures are allowable for current<\/strong> financial impacts whereby quantitative figures are not available. For anticipated<\/strong> financial impacts, qualitative disclosures (such as work plans and timetables) are sufficient to address issuers\u2019 concerns on data accuracy.<\/p>\n Scenario analyses will be crucial in assessing issuers\u2019 climate resilience. Issuers should identify the implications of the transition to a lower carbon economy on their operations, and evaluate the risks over different time horizons. In analysing risks, risk assessment tools should be used to assess the likelihood and impact levels so that issuers can prioritise risks that pose a higher significance. For climate-related opportunities, disclosures on the processes to identify, assess, prioritise, and manage relevant opportunities, and how such processes are integrated into the company\u2019s overall management approach were proposed.<\/p>\n Kickstart Scope 3 Accounting <\/strong><\/p>\n In addition to Scope 1 and 2, Scope 3 emission disclosures were proposed, which would include a thorough assessment of emissions (such as work plans, progress, and timetables) in the relevant upstream or downstream activities along the value chain.<\/p>\n Integration of Other Climate-related Metrics<\/strong><\/p>\n The disclosure of cross-industry climate-related metrics required by the ISSB Climate Standard have been proposed: (1) amount and percentage of vulnerable assets or business activities aligned with transition and physical risks, and climate-related opportunities, and (2) amount of financing deployed towards climate-related risks and opportunities. Furthermore, disclosures on internal carbon price application, executive remuneration linked to climate-related considerations, and other industry-based disclosure requirements under internationally known ESG reporting frameworks should be considered.<\/p>\n Our Feedback<\/strong><\/p>\n The consultation might face many objections, but climate-related disclosures are a global trend. If Hong Kong is serious about becoming a regional green finance hub, embarking on this path will be necessary. We believe HKEX will take up most of the points stipulated in the consultation paper, albeit in different stages.<\/p>\n","protected":false},"excerpt":{"rendered":" In a consultation paper published on 14 April 2023, HKEX proposed to mandate climate-related disclosures in their ESG reports for all issuers, thus updating from the previous \u201ccomply or explain\u201d approach. The new Appendix 27 Part D will be based on the ISSB Climate Standard, and will come into effect on 1 January 2024 after […]<\/p>\n","protected":false},"author":3,"featured_media":6224,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-6223","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"yoast_head":"\n